A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court authorized his arrest amid concerns that he might flee the country or destroy evidence related to the allegations.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company described the situation as “unfortunate.”
Kim, 58, is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop corporations in South Korea, representing popular groups like Aespa and BTS.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 individuals as of 2020, with Kim holding approximately a 24% stake in the company. He was once South Korea’s wealthiest person, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, suggested that this could be Kakao’s “biggest crisis,” emphasizing that it is now up to those remaining in the company to prove its ability to operate successfully without its founder.